Okonkwo Prelims

illustrates the process of e-retail strategy development. As indicated in the

chart, the first step in the formulation of a feasible e-retail strategy is to deter-

mine the suitability of luxury goods to be retailed online. This leads to the

question in the following title.

Are luxury fashion products suitable for e-retailing?

The early part of this chapter identified the major reasons for the late adop-

tion of e-retail by luxury fashion brands, ranging from concern over diluting

the brand aura to the popular consensus of the incompatibility of sensory

goods and the web. Although these arguments have some logical business

credibility, the reality is that it is possible to sell luxury goods online prof-

itably. As proof to this, luxury brands like Louis Vuitton, Christian Dior and

Gucci are pioneering e-retail in the industry and currently reaping substantial

online sales turnover in the process.

An effective method of gauging the suitability of goods for online sales

is through the ‘Electronic Shopping Test’ or ES test framework, devised by

M. de Kare Silver in his book, E-Shock: The New Rules. The ES test quan-

tifies the likely e-retail potential of certain products and estimates the

proportion of the target customers that are likely to buy the goods online.

This strategic tool, when frequently utilized, acts as an aid in the develop-

ment and revision of e-retail strategies. It utilizes a three-factor test criterion

based on (a) product characteristics; (b) familiarity and confidence; and (c)

consumer attributes.

Product characteristics

The product characteristics are classified in terms of their physical and virtual

attributes. The products, which appeal to one or more of the human senses of

sight, sound, taste, touch and smell are grouped as physical goods. Those that

require a minimal use of the human senses and a high level of ‘intellect sense’

are classified as virtual products. Luxury fashion goods naturally fall within

the physical goods group while services such as travel and banking fall within

the virtual products classification.

192

luxury fashion branding

E-retail

suitability

E-retail

strategy

option

choice

Online

marketing/

branding

strategy

Website

and

e-store

design

Figure 6.5 The process of e-retail strategy development